Duff on Hospitality Law

In today’s post, Malcolm Seymour, a member of our New York office who specializes in commercial litigation and regulatory enforcement actions, discusses the benefits and legal considerations for those who provide free WiFi to their hospitality customers.

Whether booking a hotel, reserving a flight or choosing a café, hospitality customers are increasingly influenced by the quality and availability of high-speed wireless internet networks (“WiFi”) at their chosen destination. One third of all hotel guests, and two thirds of all business travelers, say that they would refuse to return to a hotel with substandard WiFi. And with the advent of free web services that monitor hotel WiFi performance, it is easier than ever for customers to vote with their feet.

The good news is that hotspot operators in the United States can, through the adoption of best practices, shield themselves from most legal liability under the Digital Millennium Copyright Act (“DMCA”). Under the DMCA, Internet service providers -- including WiFi hosts -- are not supposed to be liable for copyright infringements committed by users if they act as “mere conduits” for user traffic. The DMCA creates a safe harbor for such conduits, provided they meet several criteria:

The WiFi host must not initiate the transmission (upload or download) of information over their network;

The host must not mediate this transmission in any way, i.e. by specifying a recipient for the transmission, specifying the material to be transmitted, or modifying the content transmitted;

The host must not store copies of the content transmitted for longer than necessary to complete the transmission;

The host must adopt and reasonably implement a “take-down” plan for responding to notices of infringement and for banning repeat infringers; and

The host must not interfere with standard technical measures used for copyright protection, such as watermarks on images, password protection, or other digital rights management devices.

Hotels should ensure that their wireless networks are enabled to comply with these requirements, especially when it comes to suspending service to repeat infringers. Hotels that have implemented reasonably thorough policies to guard against copyright infringement should be safe if litigation erupts over piracy committed by a hotel guest or visitor.

The bad news -- we are lawyers after all -- is that copyright violations can still cause law-abiding hotspot operators big headaches with their service providers, even placing them at risk of service suspension. What’s more, copyright law varies between countries, and not all travel destinations have kept pace with the United States in modernizing their laws to accommodate open sharing of WiFi connections.

Germany is perhaps the most notorious outlier, thanks to a 2012 decision and subsequent enactment that hold operators of unsecured WiFi networks liable for the copyright infringement of their users. Backlash against these laws has prompted Germany’s current parliament to propose a repeal of this law. New Zealand is another destination known for its harsh “three strikes” rule, which may necessitate implementation of special software protocols to prevent peer-to-peer sharing over WiFi networks.

With the rise of smartphones and handheld devices, hospitality customers increasingly view open WiFi as a necessity rather than a luxury. Customers, while rarely grateful for strong service or fast connection speeds, will notice and complain if service is lacking. But as these examples show, operating a WiFi hotspot introduces serious risks that can only be mitigated by someone with knowledge of local law.

If you have any questions about setting up or securing your network, please feel free to contact me or Malcolm directly.

Any uncertainty regarding the FCC’s position on hotels’ interference with Wi-Fi hot spots was answered yesterday. In its January 27, 2015 Enforcement Advisory, the FCC spoke directly to the “disturbing trend” of hotels and other commercial establishments that block personal Wi-Fi hot spots.Colin Andrews, member of our Communications practice team in Washington, D.C., brings us the latest development in Wi-Fi blocking practices. Thank you, Colin! - Greg

Yesterday’s Advisory stated that any “willful or malicious” interference with guests’ personal hot spots is a violation of Section 333 of the Communications Act, which prohibits any person from interfering with any radio communications equipment licensed or authorized by the Act.

The FCC’s Advisory expanded upon a recent Consent Decree between the FCC and Marriott International, Inc. which resulted from a complaint to the FCC filed by a Marriott customer. In the Consent Decree, the FCC concluded that Marriott had deliberately blocked its guest hot spots in order to require guests to pay for the hotel’s Wi-Fi. Marriott entered into a three-year compliance program and agreed to pay $600,000 to settle the case. A discussion of the Marriott Consent Decree can be found in our blog’s archives here.

Yesterday’s FCC Advisory is based upon similar complaints received in response to the Marriott settlement. The Advisory commits the FCC to investigate such complaints “aggressively” and to take appropriate action, including “substantial monetary penalties,” against any violators. The Advisory also encouraged consumers to file Wi-Fi blocking complaints with the FCC.

In a separate statement, FCC Chairman Tom Wheeler directly targeted both Marriott and the hotel industry by declaring that “consumers must get what they pay for... [and] Marriott’s request seeking the FCC’s blessing to block guests’ use of non-Marriott networks is contrary to this basic principle.” The FCC Chairman was referring to a still-pending August 25, 2014 Petition for Declaratory Ruling filed by the American Hotel & Lodging Association, Marriott International, Inc. and Ryman Hospitality Properties. The Petition requested that the FCC “declare that the operation of… authorized equipment by a Wi-Fi operator in managing its network on its premises does not violate [Section 333], even though it may result in ‘interference with or cause interference to’” a guest’s hot spot.

If you have any questions or for more information, please feel free to contact me or Colin.

Marriott International, Inc. found out the expensive way that it should not disable customers’ mobile hotspots. It entered a Consent Decree with the Federal Communications Commission (“FCC”) in which it agreed to pay $600,000 to the U.S. Treasury.

A number of mobile devices, such as smart phones, can serve as a wireless access point to the Internet, sometimes called Wi-Fi hot spots. Consumers use these devices to connect their laptops to the Internet through their smart phones. Marriott employees at Gaylord Opryland, which Marriott manages, were using Wi-Fi monitoring systems with containment features to de-authenticate guest-created Wi-Fi hotspots in their conference facilities, ballrooms, guest rooms or public areas. Meanwhile, Marriott had been charging conference exhibitors and attendees from $250 to $1000 per device to use the Gaylord Wi-Fi service in its conference facilities.

An individual complained to the FCC that he could not use his mobile hotspot in the convention space at a function at Gaylord Opryland. The FCC investigated Marriott’s compliance with Section 333 of the Communications Act, which prohibits any person from interfering with any radio communications equipment licensed or authorized by the Communications Act. To resolve that investigation, Marriott agreed to enter into a Consent Decree with the FCC requiring Marriott to pay the U.S. Treasury $600,000 and to file compliance reports for the next three years. A copy of the Order and Consent Decree is available here.

Marriott has since instructed the properties under its management to cease using containment equipment in any way to block consumer’s mobile hotspots. More information about impermissible Wi-Fi blocking practices is at www.fcc.gov/jammers.

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Greg Duff, EditorGreg Duff founded and chairs GSB’s national Hospitality, Travel & Tourism group. His practice largely focuses on operations-oriented matters faced by hospitality industry members, including sales and marketing, distribution and e-commerce, procurement and technology. Greg also serves as counsel and legal advisor to many of the hospitality industry’s associations and trade groups, including AH&LA, HFTP and HSMAI.